Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.
|
ABC Music Co.
|
|
Income Statement
|
|
For the Year Ended June 30, 2016
|
|
|
|
|
|
Net Sales
|
|
$350,000
|
|
Less Expenses
|
|
|
|
Cost of Goods Sold
|
$200,000
|
|
|
Depreciation Expense
|
20,000
|
|
|
Administrative Expenses
|
52,000
|
|
|
Selling Expenses
|
45,000
|
|
|
Loss on Sale of Investment
|
500
|
|
|
Total Expenses
|
|
317,500
|
|
Net Income
|
|
$ 32,500
|
|
ABC Music Co.
|
|
Comparative Balance Sheets
|
|
June 30 2016 and 2015
|
|
Assets
|
2016
|
2015
|
|
Cash
|
$ 4,500
|
$ 15,000
|
|
Accounts Receivable (net)
|
35,000
|
27,500
|
|
Inventory
|
40,000
|
50,000
|
|
Prepaid Expenses
|
3,000
|
2,500
|
|
Long Term Investments
|
20,000
|
25,000
|
|
Plant and Equipment
|
80,000
|
40,000
|
|
Accumulated Depreciation
|
(20,000)
|
(12,000)
|
|
Total Assets
|
$162,500
|
$148,000
|
|
|
|
|
|
Liabilities
|
|
|
|
Accounts Payable
|
$ 2,000
|
$ 6,000
|
|
Wages Payable
|
220
|
260
|
|
Taxes Payable
|
780
|
740
|
|
Notes Payable
|
20,000
|
12,000
|
|
Total Liabilities
|
$23,000
|
$ 19,000
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
Common Stock
|
$ 65,000
|
$ 65,000
|
|
Retained Earnings
|
81,500
|
64,000
|
|
Total Paid in Capital and Retained Earnings
|
146,500
|
129,000
|
|
Less: Treasury Stock
|
( 7,000)
|
0
|
|
Total Stockholders' Equity
|
$139,500
|
$129,000
|
|
Total Liabilities and Stockholders' Equity
|
$162,500
|
$148,000
|
Additional Information:
- A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.
- A long term investment was sold for $4,500.
- The outstanding notes are long term. An $8,000 note was issued during 2016.
- Common stock was repurchased.